'Detroit has been in economic decline for half a century now'

Frank Islam

When the city of Detroit filed for bankruptcy, with more than $18 billion owed to over 100,000 creditors, the reactions across the US ranged from sadness and dismay to shock.

Until now bankruptcy was reserved for lesser known municipal areas like San Bernardino, California, Jefferson County, Alabama, and Central Falls, Rhode Island —not Detroit, the once proud city that is forever associated with America’s automobile industry and popular music.

Yet, the bankruptcy filing should not have surprised anyone. The Motor City has been in perpetual decline for half a century now. In 1950, with a population of 1.8 million, Detroit was nearly as big as Los Angeles, then the fourth most populous US city. Today, a little over 700,000 people live in Motown, now ranked 18th among American cities. In the last decade alone, its population dwindled by a quarter.

To be fair, Detroit is not the only Midwestern city to shrink in the past few decades. A number of metropolises on the Great Lakes, including Cleveland, St Louis and even Chicago, have lost population significantly, as manufacturing jobs — staple of the region’s urban economies — moved to Japan, China and Korea, among others.
But while most other cities have managed to stay afloat by adjusting to the changed realities, Detroit has not. Huge benefits committed to retired employees and its inability to bring about any fiscal sanity finally forced it to do what no other American city of its size has done before.

In the past few days, any number of theories has been advanced explaining what led to Detroit’s Chapter 9 filing for bankruptcy protection.

The one factor that nearly everyone agrees on is that the decline of the American auto industry contributed to the city’s collapse in no small measure. As Asian and European car manufacturers edged ahead of the city’s Big Three — GM, Chrysler and Ford — both globally and in the US, jobs disappeared from Detroit in tens of thousands, never to return.

Paradoxically, the restructuring of the auto industry after the Great Recession — though it saved the car manufacturers — was the last nail in the coffin for the city. Prior to the recession, Detroit was crawling its way back, having managed to land substantial investment. But the auto industry restructuring shrank its tax base, fuelling the city’s rapid decline towards bankruptcy.

It has also been pointed out that the migration of white residents and the resulting segregation led to disinvestments.

There is no more depressing dystopia than a city that is in decline economically. Detroit has been a classic example, with huge unemployment, poverty and crime leading to a mass exodus of people.

Consider the following statistics:

-Detroit’s unemployment rate is double the national average

-About 70% of murders in the city go unsolved; most of them are drugrelated killings

-There are 70,000 abandoned buildings, 31,000 empty buildings and 90,000 vacant lots in the city. So nearly $18 million in property taxes went unpaid last year

What is the way forward? Many are hoping and praying that swift bankruptcy proceedings will enable the city to come out of the mess. History is littered with remnants of cities that rose and fell for a variety of reasons. In the case of Detroit, the tragedy is that the decline has happened in front of our eyes and it was caused not by marauding armies or natural devastation, but by economic forces.

The writer, a businessman and author, is based in Washington, DC Global India Newswire